4th Semester : Paper – CC-4.1 Ch
Solved as per provision of A.Y. 2022-23
Wherever reference to page number is given, it is referred to Taxation I by Mundhra & Mundhra published by Law Point
Question 1
- What do you mean by the term ‘assessment year’?
- Mention any two circumstances where income of previous year is assessed in the same year.
- Determine the status of the following persons:
- ABCD, an alumni association of students.
- Sonarpur Municipality.
- Mention any two fully exempted incomes.
Answer 1
(a) Refer Page 5
(b) Refer Page 7
(c) (i) AOP/BOI (ii) Local Authority
(d) Refer Page 61
Question 2
Das has received the following amounts during the previous year ending on March 31, 2022:
- Income from house property in Sri Lanka received therein ₹ 22,500.
- Income from salary in India ₹ 1,20,000.
- Dividend from an Indian company received in China ₹ 25,000 (gross).
- Income from business controlled from Bangladesh ₹ 37,500.
- ₹ 10,000 earned in England during the previous year 2019-20 was brought to India.
Compute the Gross Total Income of Mr. Das if he is:
- Ordinarily resident
- Not ordinarily resident and
- Non-resident
Answer 2
Calculation of income liable to be taxed in India of Mr. Das for the A.Y.2021-22
| Particulars | Resident & Ordinarily resident | Resident but not ordinarily resident | Non-resident |
|---|---|---|---|
| Income from house property in Sri Lanka received therein | 22,500 | – | – |
| Income from salary in India | 1,20,000 | 1,20,000 | 1,20,000 |
| Dividend from an Indian company received in China | 25,000 | 25,000 | 25,000 |
| Income from business controlled from Bangladesh | 37,500 | – | – |
| (It is assumed that the income is not related to India) | |||
| Past year income | – | – | – |
| Income liable to tax in India | 2,05,000 | 1,45,000 | 1,45,000 |
Question 3
- Define agricultural income
- Mr. Vishal retired from service on 31.10.2021 and received ₹ 5,00,000 as gratuity. He was entitled to a pension of ₹ 10,000 per month w.e.f. 01.11.2021. From 01.01.2022 he commuted 50% of his pension and received ₹ 3,00,000 as commuted pension. Compute his taxable amount of pension for the assessment year 2022-2023.
Answer 3
- Refer Page 78
- Computation of Taxable Pension of Mr. Vishal for the A.Y.2022-23
Particulars Details Amount Uncommuted Pension (₹ 10,000 * 2) 1 20,000 (₹ 5,000 * 3) 2 15,000 35,000 Commuted Pension 3,00,000 Less: Exempted u/s 10(10A)(ii) 1/3rd of ₹ 6,00,000 3 2,00,000 1,00,000 Taxable Pension 1,35,000 - From 1/11/2021 to 31/12/2021: 100% pension is in uncommuted form
- From 1/1/2022 to 31/3/2022: 50% pension is in uncommuted form as 50% pension being commuted.
- Commuted amount for 50% of pension = ₹ 3,00,000
Therefore, commuted amount for 100% of pension = ₹ 6,00,000
Question 4
Mala Sen, furnishes the following information for the previous year 2021-22. Compute her income from other sources for the assessment year 2022-23.
- Winning from lottery after deducting tax @ 31·2% ₹ 1,37,600 (expenses incurred ₹ 2,000).
- ₹ 40,000 received as interest from Government securities
- Dividend from Tata Steel ₹ 30,000.
- Family pension received ₹ 48,000.
- Income from agriculture land situated in Bangladesh ₹ 24,000.
Answer 4
Computation of Income from Other Sources of Mrs. Mala Sen for the A.Y. 2022-23
| Particulars | Amount | Amount |
|---|---|---|
| Winning from lottery [₹ 1,37,600/31.2%] | 2,00,000 | |
| Interest from Government Securities | 40,000 | |
| Dividend from Tata Steel | 30,000 | |
| Family Pension | 48,000 | |
| Less: Standard Deduction [Lower of ₹ 15,000 or 1/3rd of pension] | 15,000 | 33,000 |
| Income from agriculture land situated in Bangladesh | 24,000 | |
| Income from Other Sources | 3,27,000 | |
It is assumed that she is an ordinarily resident.
Question 5
From the following particulars, compute Gross Total Income and losses to be carried forward by Sk. Rasidul Alam for the assessment year 2022-23:
| ₹ | |
| Income from salary (Taxable) | 7,00,000 |
| Income from House Property: | |
| House-I (Let out) | (–) 7,37,500 |
| House-II (Self occupied, Interest on borrowed money) | (–) 22,500 |
| Income from speculation business | 31,250 |
| Short-term capital gain | 30,000 |
| Long-term capital loss | 62,500 |
| Speculation business loss of assessment year 2021-22 | 37,500 |
| Short-term capital loss of assessment year 2021-22 | 20,000 |
Answer 5
Computation of gross total income of Sk. Rasidul Alam for the A.Y. 2022-23
| Particulars | Details | Amount |
|---|---|---|
| Salaries | 7,00,000 | |
| Income from house property | ||
| House-I (Let out) | (7,37,500) | |
| House-II (Self occupied, Interest on borrowed money) [Max] | (22,500) | (2,00,000) |
| Balance shall be carried forward to next year | 5,60,000 | |
| Profits and gains of business or profession | ||
| Income from speculation business | 31,250 | |
| Less: Brought forward Speculation business loss of A.Y. 2021-22 | 31,250 | Nil |
| Capital gains | ||
| Short term capital gain | 30,000 | |
| Less: Brought forward Short-term capital loss of A.Y. 2021-22 | 20,000 | 10,000 |
| Gross Total Income | 5,10,000 | |
Loss to be carried forward for subsequent assessment years:
| ||
Question 6
- From the following details for the previous year 2021-22, compute depreciation
and/or capital gain (or loss) for the relevant assessment year:₹ W.D.V. of the block of plant and machinery on 01.04.2021 2,00,000 (consisting of plants X and Y-depreciation rate 15%) Cost of plant Z acquired on 19.11.21 (depreciation 15%) 1,00,000 Case (i): All plants are sold for ₹ 2,80,000 Case (ii): Plant X and Y are sold for ₹ 2,80,000 - Discuss the admissibility of the following expenses in case of an individual businessman Sandip Sarkar under the relevant provisions of the Income Tax Act.
- A cash payment of ₹ 50,000 made to a creditor who refused to accept a cheque.
- A sum of ₹ 1,00,000 on account of interest on term loan was paid one month after the due date of submission of return.
Answer 6
- Computation of Depreciation / STCG as per I.T. Act for the A.Y.2022-23
Particulars Case (i) Case (ii) Block 1: Plant & Machinery (Rate of depreciation: 15%) W.D.V. as on 1/4/2021 2,00,000 2,00,000 Add: Purchase during the year 1,00,000 1,00,000 3,00,000 3,00,000 Less: Asset sold during the year 2,80,000 2,80,000 W.D.V. as on 31/03/2021 – 20,000 Short Term Capital Gain (20,000) Depreciation (15% of ₹ 20,000 for half year) 1,500 Asset which is put to use for less than 180 days is eligible for ½ year depreciation.
- Entire payment of ₹ 50,000 shall be disallowed u/s 40A(3)
- Such interest shall be allowed in the next assessment year. [Sec. 43B]
Question 7
- Discuss in brief about the provision of clubbing of income of a minor.
- State the amount of deduction available for interest on loan u/s 24(b) in case of a self-occupied property.
Answer 7
(a) Refer Page 497 (b) Refer Page 244
Question 8
Nitisha has made the following investments/payments during the previous year 2022-23:
| ₹ | |
|---|---|
| Contribution to Recognised Provident Fund | 25,000 |
| Deposit in Public Provident Fund | 1,00,000 |
| Life insurance premium paid on own life | |
| (Sum assured ₹ 1,00,000 taken on 10.10.2010) | 25,000 |
| Life insurance premium on daughter | |
| (Policy value ₹ 1,20,000 taken on 01.01.2015) | 15,000 |
| Life insurance premium paid on mother’s life | |
| (Policy value ₹ 2,00,000 taken on 15.12.2018) | 20,000 |
| Purchase of NSC (VIII issue) | 10,000 |
| Accrued interest on NSC (including last year’s interest of ₹ 1,000) | 6,000 |
| Repayment of home loan to SBI (including principal ₹ 10,000) | 50,000 |
| Calculate the amount of deduction under section 80C. |
Answer 8
Computation of Deduction u/s 80C
| Particulars | Amount |
|---|---|
| Contribution to Recognised Provident Fund | 25,000 |
| Deposit in Public Provident Fund | 1,00,000 |
| Life insurance premium paid on own life [upto 20% of sum assured] | 20,000 |
| Life insurance premium on daughter [upto 10% of sum assured] | 12,000 |
| Life insurance premium paid on mother’s life | Not Eligible |
| Purchase of NSC (VIII issue) | 10,000 |
| Accrued interest on NSC (excluding 6th year’s interest) | 5,000 |
| Repayment of home loan to SBI – Principal Amount | 10,000 |
| Qualifying amount | 1,82,000 |
| Deduction u/s 80C (Maximum Limit) | 1,50,000 |
Question 9
Surajit Roy is the Managing Director of ABC Ltd. (a private limited company) in Kolkata. He furnishes the following particulars of his income for the financial year 2021-22:
- Basic salary @ ₹ 40,000 per month
- Dearness allowance @ 50% of basic salary (forming part of salary for computation of retirement benefits)
- House rent allowance ₹ 2,500 p.m. During the year 2021-22, he stayed in a rented house in Kolkata paying monthly rent of ₹ 3,000.
- Children education allowance received @ ₹ 200 p.m. per child for his three children.
- Medical allowance received @ ₹ 600 p.m. (Actual medical expenses incurred by him during the year amounted to ₹ 5,000).
- He contributes 15% of salary to recognised Provident Fund. His employer also makes a matching contribution.
- Interest credited to Recognised Provident Fund @ 12% p.a. amounted to ₹ 9,600.
- His employer provided a 1200 c.c. car. He used the car both for official and private purposes. All expenses are borne by his employer.
- He was provided with a servant for his domestic work. His employer paid ₹ 1,500 per month to the servant.
- Professional tax of Mr. Roy @ ₹ 200 p.m. was also paid by his employer.
Compute the income from salary of Mr. Surajit Roy for the assessment year 2022-23.
Answer 9
Computation of Salaries of Mr. Surajit Roy for the A.Y.2022-23
| Particulars | Working | Details | Amount | Amount |
|---|---|---|---|---|
| Basic | 4,80,000 | |||
| Allowances | ||||
| Dearness allowance | 2,40,000 | |||
| House Rent Allowance | 30,000 | |||
| Less: Min. of the following is exempt u/s 10(13A) | ||||
| a. Actual HRA | 30,000 | |||
| b. 50% of salary | 3,60,000 | |||
| c. Rent paid – 10% of salary [₹ 36,000 – ₹ 72,000] | Nil | Nil | 30,000 | |
| Children Education allowance [₹ 200 x 3 x 12] | 7,200 | |||
| Less: Exempted [₹ 100 x 2 x 12] | 2,400 | 4,800 | ||
| Medical allowance | 7,200 | 2,82,000 | ||
| Perquisites u/s 17(2): | ||||
| Car facility [₹ 1,800 x 12] | 21,600 | |||
| Domestic helper | 18,000 | |||
| Professional Tax | 2,400 | 42,000 | ||
| Employer’s contribution to RPF | ₹ 7,20,000 x 15% | 1,08,000 | ||
| Less: Exempted | 84,600 | 21,600 | ||
| Interest @ 12% on RPF | 9,600 | |||
| Less: Exempted | 7,600 | 2,000 | 23,600 | |
| Gross Salary | 8,27,600 | |||
| Less: Standard Deduction u/s 16(ia) | 50,000 | |||
| Less: Professional Tax u/s 16(iii) | 2,400 | 52,400 | ||
| Taxable Salary | 7,75,200 | |||
Notes : Salary for the purpose of
| Particulars | HRA | RPF |
|---|---|---|
| Basic salary | 4,80,000 | 4,80,000 |
| Dearness allowance | 2,40,000 | 2,40,000 |
| House Rent allowance | ||
| Children Education allowance | ||
| Medical Allowance | ||
| Total | 7,20,000 | 7,20,000 |
Question 10
Sayani Mallick furnished the following information for the previous year 2021-22:
| House – I | House – II | |
|---|---|---|
| Where situated | Kolkata | Midnapur |
| Purpose of use | Let out | Self-occupied |
| Construction completed on | 20.03.2014 | 25.08.2016 |
| Gross Municipal Value (₹) | 3,75,000 | 3,12,500 |
| Fair rent (₹) | 7,50,000 | 5,00,000 |
| Annual rent (₹) | 9,00,000 | — |
| Standard rent (₹) | 6,87,500 | — |
| Vacancy period | 3 months | — |
| Municipal tax (₹) | 40,000 | 15,000 |
| Interest on loan (₹) | 31,250 | — |
| Loan taken for construction @8% p.a. (₹) | 25,00,000 | |
| (Date of taking the loan) | — | (30.09.12) |
Other information: In case of House – I, municipal tax for the last quarter remains unpaid.
Compute ‘Income from house property’ for Mrs. Mallick for the Assessment Year 2022-23.
Answer 10
Computation of Total Income of Mrs. Sayani Mallick for the A.Y. 2022-23
Working
| Particulars | Details | Details | Amount |
|---|---|---|---|
| House 1: Let out | |||
| Gross Annual Value | 6,75,000 | ||
| Less: Municipal Tax (₹ 40,000/4 x 3) | 30,000 | ||
| Net Annual Value (NAV) | 6,45,000 | ||
| Less: Deduction u/s | |||
| 24(a) Standard Deduction @ 30% of NAV | 1,93,500 | ||
| 24(b) Interest on loan | 31,250 | 2,24,750 | 4,20,250 |
| House 2: Self Occupied | |||
| Net Annual Value (NAV) | Nil | ||
| Less: Deduction u/s | |||
| 24(b) Interest on loan [₹ 25,00,000 x 8%] | 2,00,000 | (2,00,000) | |
| Income from House Property | 2,20,250 |
- Computation of GAV
#Till step 3, ARR is less than RER due to vacancy [otherwise ARR would have been ₹ 9,00,000. Therefore, GAV (due to step 4) will be the ARR computed in step 2.Step Particulars House 1 1 RER 6,87,500 2 Actual rent received 6,75,000 3 Higher of RER and ARR 6,87,500 4 GAV 6,75,000#
Question 11
Suraj Soren submits the following profit and loss account of his business for the year ended 31.03.2022:
| Particulars | Amount (₹) | Particulars | Amount (₹) |
|---|---|---|---|
| To Opening Stock | 67,500 | By Sales | 7,35,000 |
| To Purchases | 5,25,000 | By Interest on Fixed Deposit | 15,000 |
| To Interest on capital | 3,000 | By Bad Debt Recovery | 4,500 |
| To Depreciation | 33,000 | (Disallowed earlier year) | |
| To Legal expenses | 9,000 | By Closing Stock | 75,000 |
| To Salaries | 31,500 | ||
| To Payment to IIT, Delhi for Scientific research | 9,000 | ||
| To Life Insurance Premium | 7,500 | ||
| To Bad Debt | 7,500 | ||
| To Advertisement | 45,000 | ||
| To Provision for Bad Debts | 1,500 | ||
| To Provision for Income Tax | 15,000 | ||
| To Net Profit | 75,000 | ||
| 8,29,500 | 8,29,500 |
- Salary include ₹ 9,000 paid to Mr. Soren.
- Depreciation as per IT rules ₹ 37,500.
- Legal Charges include ₹ 3,000 paid as penalty for infringement of Customs Law.
- Sales include ₹ 30,000 being the value of goods withdrawn by the proprietor, cost of which is ₹ 27,000.
- Closing stock overvalued by ₹ 7,500.
Answer 11
Computation of Profits and gains of business or profession of Shri Suraj Soren for the A.Y. 2022-23
| Particulars | Note | Details | Amount |
|---|---|---|---|
| Net profit as per Profit and Loss account | 75,000 | ||
| Add: Expenditure disallowed but debited in P/L A/c | |||
| Interest on capital | 1 | 3,000 | |
| Depreciation | 2 | 33,000 | |
| LIC Premium | 3 | 7,500 | |
| Provision for Bad Debts | 4 | 1,500 | |
| Provision for Income Tax | 5 | 15,000 | |
| Salary to himself | 6 | 9,000 | |
| Penalty | 7 | 3,000 | |
| Cost of goods sold to himself | 8 | 27,000 | 99,000 |
| 1,74,000 | |||
| Less: Expenditure allowed but not debited in P/L A/c | |||
| Depreciation u/s 32 | 2 | 37,500 | |
| Less: Income not taxable but credited to P/L A/c | |||
| Sales to himself (goods withdrawn for personal purpose) | 8 | 30,000 | |
| Recovery of bad debts | 9 | 4,500 | |
| Overvaluation of closing stock | 10 | 7,500 | |
| Less: Income taxable under other head but credited to P/L A/c | |||
| Interest on Fixed Deposit | 11 | 15,000 | 94,500 |
| Profits and gains of business or profession | 79,500 | ||
Notes
- Interest on capital to proprietor is not allowed as no one can earn from a transaction with himself.
- Depreciation as per Income tax shall be allowed
- Payment of life insurance premium is not allowed, hence disallowed. However, he can claim deduction u/s 80C
- Provision for bad debt shall be disallowed
- Income tax is disallowed u/s 40(a)
- No one can earn from himself.
- Any payment made for infringement of law is disallowed.
- Any expenditure of personal nature is not allowed. Further, no one can earn from a transaction with himself. Hence, sale made to himself is not treated as income.
- Since bad debt was disallowed earlier, recovery thereof is not taxable
- Due to overvaluation of closing stock income was inflated, so it is reduced from the income.
- Interest on fixed deposit is taxable under the head ‘Income from other sources’.
Question 12
- Subham furnishes the following information for the previous year 2020-21:
Gold Residential House
Property at KolkataDate of purchase 05-10-2020 15-10-2012 Date of sale 15-03-2022 10-12-2021 Cost of acquisition (₹) 1,00,000 10,00,000 Sale proceeds (₹) 1,50,000 55,10,000 Expenses in connection with sales — 5,00,000 Subham purchased a new flat in New Town on January 15, 2022 for ₹ 15,00,000. Compute his taxable capital gain/loss for the assessment year 2022-23.
[Cost Inflation Index (CII) : 2012-13 : 200; 2021-22 : 317]
- From the following information, state the availability of rebate u/s 87A.
- Total Taxable Income ₹ 4,75,000
- Total Taxable income ₹ 6,00,000
- Write a short note on exemption u/s 54EC
Answer 12
- Computation of capital gain of Mr. Subham for A.Y. 2021-22
Particulars House Gold Sale consideration 55,10,000 5,00,000 Less: Expenses on transfer 5,00,000 – Net sale consideration 50,10,000 5,00,000 Less: Indexed cost of acquisition 10,00,000 * 317/200 15,85,000 Less: Cost of acquisition 1,00,000 Less: Indexed cost of improvement – – Long term Capital gain 34,25,000 Short term Capital gain 4,00,000 Less: Exemption u/s 54 15,00,000 NA Taxable Long term capital gain< 19,25,000 – Taxable Short term capital gain> – 4,00,000 - (i) Available (ii) Not available
- Refer Page 432